Question

Lacey opened a savings account and deposited $100.00. The

account earns 6% interest, compounded monthly. If she wants
to use the money to buy a new bicycle in 2 years, how much
will she be able to spend on the bike?
Round your answer to the nearest cent.

Answer 1

$244.00

Explanation:

- gave bank $100

- +6% of $100 per month

- 6% of $100 = $6 (earns $6 per month)

- twelve months in a year, so 12 x $6 = $72 per year

- $100 + $72 + $72 = $244

If Lacey wants to utilize her money to purchase a new bicycle in two years, she will spend $244 on the bike.